Top 5 recent workplace developments – September 2024

Here is our selection of key recent employment law developments for employers, HR professionals and in-house lawyers.

1. Predictable working patterns

The government has confirmed it does not plan to bring into force legislation designed to give workers the right to request a more predicable working pattern.

Legislation was passed under the previous Conservative government which would have given certain workers and agency workers the right to request a more predictable working pattern. This new right was expected to come into force in September 2024.

However, the Labour government has confirmed that it has no plans to bring the legislation into force, so it appears unlikely that the right to request a more predictable working pattern will come into effect now.

Instead, Labour plans for workers to have a new right to a contract that reflects the number of hours they regularly work. They will also be entitled to reasonable notice of any changes in shift patterns with proportionate compensation for any shifts cancelled or curtailed. Further details are awaited.

Practical point

Employers who were preparing for the new right to request a more predictable working pattern coming into effect may wish to put those plans on hold while we await further details of the Labour government’s plans in this area.

2. Employment reforms update

We are expecting a draft Employment Rights Bill to be published by mid-October 2024. This will give us more details on the Labour government’s plans for employment law. Here are some developments in the meantime:

Tips - From 1 October 2024, new obligations for employers on dealing with tips will come into force. The measures include a new duty to ensure that workers receive tips, gratuities and service charges in full, and that those tips are allocated in a fair and transparent way.

Employers who are affected should ensure they have appropriate policies and procedures in place. There is also a new statutory Code of Practice on Fair and Transparent Distribution of Tips.

Sexual harassment - A new and significant duty on employers to take reasonable steps to prevent sexual harassment of their employees will come into force on 26 October 2024. For more details on how we can help your business prepare, please see our flyer and articles: Sexual harassment in the workplace: EHRC launches consultation on updated guidance, Culture in Financial Services and Culture in the Insurance Sector. This is a matter that all businesses must take active steps to address.

Flexible working - The right to work flexibly has hit the headlines recently, with commentary  around rights to ask for full-time hours to be compressed into a four-day working week. Workers already have the right to ask for flexible working (including compressed hours) from their first day of work, but employers do not have to agree to this.

The new government plans to make ‘flexible working the default…except where it is not reasonably feasible’. It is not clear exactly what this will mean in practice, but we anticipate that the intention is to put a greater onus on employers to agree flexible working requests than is currently the case, whilst still allowing employers to decline requests where the working arrangement requested is not ‘reasonably feasible’.

Rather than giving workers an absolute right to work flexibly, this is more of an evolution towards more flexible working based on existing legislation.

Fire and rehire – A new statutory Code of Practice on dismissal and re-engagement - often called ‘fire and rehire’ - came into force on 18 July 2024 despite Labour saying it did not go far enough.

We will have to see whether Labour introduce a strengthened version of the Code, as well as making other planned reforms on fire and rehire.  For further details on the plans, please read our detailed article.

The new Code sets out the steps that an employer should follow when it is considering making changes to terms and conditions and envisages it may dismiss employees if they do not agree to those changes. Where an employer has unreasonably failed to comply with the Code, awards for certain employment tribunal claims can be increased by up to 25%. However, the proposed new power for Tribunals to apply an uplift or reduction in compensation in collective consultation claims where a party failed to follow the Code has not come into force.

Trade unions and industrial action – The government has confirmed that it will repeal the Conservative government’s legislation which aimed to ensure minimum service levels during strikes. This repeal is expected to be included in the Employment Rights Bill expected by mid-October 2024. The government also plans to simplify the process for statutory recognition of trade unions and scrap other restrictions on strike action introduced by the Conservative government.

Right to switch off - It has been reported that workers who are repeatedly contacted by their employers outside of normal working hours may be able to claim uplifted compensation under the government's planned "right to switch off". We may see the government introducing a new code of practice to give workers this right. The code would not give workers a freestanding claim for compensation, but it may allow them to claim an uplift to compensation they receive where they succeed in another employment claim. Further details are awaited.

Immigration – for information on what we know so far about Labour’s immigration policies, please read our article.

There have been some recent case law updates of note.

3. Changing employment terms: “Fire and rehire”

The Supreme Court has restored an injunction preventing Tesco from “firing and rehiring” employees in order to remove a “permanent” contractual entitlement to enhanced pay.

“Firing and rehiring” is the practice of facilitating a change of employment terms by dismissing employees and then immediately re-engaging them on new terms.

The Union of Shop, Distributive and Allied Workers (USDAW) brought a claim on behalf of employees working at Tesco warehouses who were told to give up their entitlement to retained pay. This was awarded as part of a restructuring exercise in 2007, as an incentive for employees to relocate to another warehouse. USDAW argued the employees had a permanent entitlement to retained pay.

The High Court ruled that the parties intended that the entitlement to retained pay should be permanent and granted an injunction to prevent Tesco “firing and rehiring”. However, the Court of Appeal subsequently overturned this injunction.

The Supreme Court restored the injunction. The employment contracts contained a term implied by fact with the effect that Tesco’s right to terminate could not be exercised for the purpose of depriving the employees of their right to retained pay.

Practical point

See our comments above on ‘Employment reforms update’ in relation to the new statutory Code of Practice on dismissal and re-engagement.

Employers should consider how to retain flexibility when offering entitlements that may be construed as permanent. It was noted in this case that Tesco could have set a longstop date for the entitlement to retained pay but had not done so.

Tesco Stores Ltd v Union of Shop, Distributive and Allied Workers and others

4. Equal pay: Next store workers win equal pay claims

Next retail workers have succeeded in their equal pay claims comparing themselves with warehouse workers.

A group of over 3,500 retail sales consultants at Next Retail Plc (Next) brought an equal pay claim arguing that their work was of equal value to the work done by Next’s warehouse operatives, who were mostly male. At an Employment Tribunal hearing, the sales consultants, who were mostly women, were successful in showing that their work was of equal value to the work of warehouse operatives. The question then for the Tribunal to decide was whether the difference in pay could be justified by Next.

Next argued that various factors explained the difference in pay, including market forces, difficulty recruiting and retaining warehouse workers, and business viability, performance and productivity. The Tribunal found that those factors did not amount to direct discrimination. However, with reference to the equal value issue, it found that the differences in pay could not be justified.

77.5% of the retail workers at issue were female, whereas the warehouse workers were 53% male.  The Employment Tribunal found that this was enough to mean that Next's policy of paying retail workers less basic pay than warehouse workers amounted to indirect sex discrimination because of its disproportionate impact on women.

Whilst the Tribunal accepted that there were reasons why the warehouse workers were paid at a higher rate, it did not accept that there was a valid justification in law for paying retail workers lower basic pay for work of equal value. Paying the retail workers a higher rate of basic pay would have cost more, and impacted profitability, but cost alone cannot provide the justification in law.

Next were successful in justifying paying certain other payments and bonuses to warehouse staff which were not paid to retail staff, as the Tribunal recognised that Next had faced challenges in retaining and incentivising warehouse staff that did not apply to retail staff.

Practical point

This landmark equal pay ruling could, reportedly, result in Next paying around £30 million in compensation and may have ramifications for other private sector equal pay claims. It is reported that Next plans to appeal the decision.

Thandi and others v (1) Next Retail Ltd (2) Next Distribution Limited

5. Discrimination: Indirect associative discrimination

The EAT has ruled that claimants without the protected characteristic of a disadvantaged group but sharing a particular disadvantage may bring indirect discrimination claims.

For indirect discrimination to be established, the Equality Act requires claimants to both personally suffer the disadvantage and share the protected characteristic of the group disadvantaged by the provision, criterion or practice (PCP).

The Claimants were employed by British Airways plc as Heathrow-based cabin crew. The claims arose out of a restructuring exercise. The Claimants submitted that, as BA's main hub is at Heathrow airport, scheduling changes put certain groups at a disadvantage, including:

• Employees (predominantly non-British nationals) who lived in mainland Europe, and commuted to Heathrow from abroad, were at a particular disadvantage compared to those who commuted from within the UK (indirect race discrimination)
• Employees who commuted from mainland Europe claimed they were put at the same disadvantage although they did not share the relevant protected characteristic (associative indirect race discrimination).

At a Preliminary Hearing, the tribunal found that it could hear claims for associative indirect discrimination under the Equality Act.

The EAT agreed, finding that, in addition to claims where there is a PCP that puts people with a particular protected characteristic at a disadvantage, the Equality Act can allow claims where a claimant shares the same disadvantage, but does not have the same protected characteristic as the disadvantaged group.

Practical point

This decision means that the lack of a relevant protected characteristic will not necessarily prevent employees from bringing indirect discrimination claims. An example may be a policy that puts women with caring responsibilities at a disadvantage and men with caring responsibilities share the same particular disadvantage and so could claim associative indirect sex discrimination.

British Airways PLC v Rollett & others, Minister for Women and Equalities